(1) An owners corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.
(2) Interest paid or recovered forms part of the fund to which the relevant contribution belongs."
4 The material placed before the court for the purposes of the hearing of the appeal was restricted to the judgment of the Magistrate itself. Accordingly, the knowledge of factual background is so limited.
5 Proceedings were commenced in the Local Court by Statement of Liquidated Claim filed on 1 August 2002 ("the proceedings"). The claim fell within the jurisdiction of the Small Claims Division because the defendant was then seeking the recovery of a sum of $1,214.93 (being for outstanding unpaid contributions, interest and costs).
6 On 10 November 2003, the proceedings were stayed pending the determination of other proceedings then before the Consumer, Trader and Tenancy Tribunal ("the Tribunal").
7 The Tribunal proceedings were concluded on 23 April 2004. These proceedings (which had been brought by the plaintiff) were dismissed and no order was made for costs.
8 Later an Amended Statement of Claim came to be filed and the proceedings were transferred to the General Division. The claim was then in the order of $12,000.00. I was informed from the bar table that such claim had three components. There was a component for the outstanding unpaid contributions and interest. There was a component for expenses (which included an amount relating to costs claimed in respect of proceedings before the Tribunal). There was a component which fell into the category of expenses of the defendant in respect of the proceedings. From what was further said from the bar table, it seems that this component comprised not only legal costs and disbursements paid to the lawyers for the defendant ("the legal costs") but also some managing agent expenses. As I understand the position (but it was not entirely clear), the expenses were met subsequent to the commencement of the proceedings and by May 2006. Similarly it is my understanding that it is the legal costs that are the subject of this appeal.
9 The Magistrate heard argument from the parties and reserved his decision. The issue joined between the parties was whether or not the defendant was entitled to recover the legal costs as part of the claim in the proceedings. There was no dispute inter alia as to the unpaid contributions.
10 The Magistrate had regard to s 80 and what was said by Cooper AJ in Coshott v Owners of Strata Plan No 48892 [2006] NSWSC 308.
11 The Magistrate cited certain of the observations made in Coshott (including those set forth in paras [78] - [80]). He observed that there were some distinguishing features between Coshott and the facts of the case then before him.
12 The Magistrate appears to identify what was the subject of his consideration in the following terms:-
"In the present case before this court, the plaintiff's substantive claim includes legal expenses associated with the conduct of the proceedings up to the date of hearing and also embraces expenses associated with the defendant's unsuccessful application before the Consumer, Trader and Tenancy Tribunal."
13 He then looked to argument that had been put before him. Following that consideration, he observed as follows:-
"Section 80 of the Act is not expressly qualified in its terms requiring an assessment of the reasonableness or otherwise of any claimed legal expenses. Counsel advised this court that there is no parliamentary second reading speech, which can be cited to throw any light on the intent of the section. In the absence of any such 'guiding light', it is the view of this court that it certainly was not the intention of Parliament to allow the section to be interpreted in such a way that it would visit a patent injustice upon a party. It was the intention of Parliament to allow an owners corporation to recover its legal expenses - and, in the opinion of this court, legal expenses means those properly and reasonably incurred."
14 These observations appear to have led him to what he expressed to be the determination of the Court. He expressed this determination in the following terms:-
"It is the determination of this court that the provisions of s 80 of the Strata Schemes Management Act 1996 entitles the plaintiff to include in its claim all the proper and reasonably incurred legal expenses in relation to the recovery of the relevant unpaid contributions. Such expenses are not to include any costs associated with any orders made against the plaintiff in respect of procedural defalcations before the Registrar's call-over court. It is to be hoped that this determination will prompt the parties to seek to resolve these issues by settling the matter and agreeing to a sum that will resolve all issues once and for all."
15 What allowance of legal costs and disbursements was produced by this determination has been left unclear. On one view, it may be all of the legal costs and expenses claimed by the defendant save for those that have been expressly excluded. Why they were so excluded is just one of the many mysteries in this case.
16 It appears that subsequent to the determination a further application was made to amend the claim so as to add legal costs and disbursements that had been incurred subsequently up to that time. It appears that this further application was rejected by the Magistrate and that he took the view that those costs and disbursements should be dealt with by way of a costs order in the proceedings.
17 I will now address the issue agitated before this Court during the appeal in a manner that will hopefully deal with the lack of precision. As I understand it, what the Court is asked to decide involves a question of whether or not the word "expenses" as it appears in s 80 enables the recovery of the legal costs as part of the claim.
18 I now return to the section itself. There seems to be common ground that the parliamentary speeches offer no assistance on the question of its construction. The section was also given consideration in Owners of Strata Plan 63800 v Wolfe [2007] NSWSC 204.
19 The judgment in Wolfe contains the following:-
"17 Section 80 forms part of Division 2 of Chapter 3 Part 3 (which also includes sections 78 and 79). Section 78 deals with the manner of levy contributions. Section 79 is headed 'interest and discounts on contributions'. It deals with when a levied contribution becomes due and payable. It also deals, inter alia, with the question of interest on unpaid contributions.
18 It seems to me that s 80 confers on an owners corporation a statutory right of action. The section enables the recovery by it (as a debt) of unpaid contributions as specified therein, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.
19 The Court was informed that 'expenses' is not defined in the Act. This would appear to be so. It would appear to be intended to enable an owner's corporation to recover expenses other than legal costs (including expenses that would not otherwise be recoverable). It seems to me that the full ambit of the word is far from clear. Whether or not it was intended to encompass legal costs is not a matter that I have to determine in this case. It is common ground between the parties that 'expenses' does include legal costs.